Energy prices hit BP first quarter results

BP's first quarter profits fell by 17 per cent as the oil giant faced up to lower energy prices during the first three months of the year. In addition, the profits figure of £2.18bn reflected slightly lower production levels against the same period a year earlier.

BP's first quarter profits fell by 17 per cent as the oil giant faced up to lower energy prices during the first three months of the year.

In addition, the profits figure of £2.18bn reflected slightly lower production levels against the same period a year earlier.

Profits also declined in the fourth quarter of 2006, although the figure for the year still came in 15 per cent higher at £11.34bn.

BP is under pressure to improve its performance after one of the toughest trading periods in its history. Chief executive Lord Browne is due to leave in July, several months ahead of schedule, while the company was recently rapped over process safety failings at its US refineries in the Baker report, commissioned in the wake of the 2005 explosion at BP's Texas City operation, which killed 15 workers.

There has also been a series of leaks at its Prudhoe Bay field in Alaska.

Fewer barrels

The oil giant said in February that it would produce nearly 1m fewer barrels a year by 2009 than previously expected and would adopt a more conservative approach to production guidance until 2012, blaming a shortage of trained workers and the need to put safety before output.

BP has already indicated that production would remain flat in 2007, at 3.8m to 3.9m barrels of oil equivalent, increasing to 4m barrels by 2009 - 900,000 fewer than forecast last year - and 4.3m by 2012.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "BP continues its dogged fight to recapture former glories. Faced, as it is, with reduced production and higher costs, lower oil prices and the ongoing barrage resulting from its earlier failures, its challenges are not yet over."